The European Commission’s consumer sentiment indicator slumped to minus 15 in July, below its minus 14.7 reading in the previous month. In a sign the recovery has begun to slow, economists polled by Reuters had previously set the expectation at minus 12. The EU is facing its deepest recession since the end of the Second World War after governments were forced to shutdown their economies to curb the spread of coronavirus.
Bert Colijn, a senior economist at ING, said concerns over new local outbreaks of the deadly disease could be undermining the economy’s rebound.
He said the data “causes doubts about the pace of recovery in a critical phase for the Eurozone economy, as reopening after lockdowns should coincide with strong demand if lasting damage is to be minimised”.
Melanie Debono, an economist at Capital Economics, said the consumer sentiment indicator suggested the recovery had begun to slow.
She said: “While consumers may continue to spend some of the savings that they accumulated during lockdowns, anxiety about a second wave of infections will keep people away from the shops and certain social activities.”
Similar national consumer behaviour surveys showed mixed results across the Continent.
French Statistics Office data showed spending in restaurants in June was down 20 percent from pre-pandemic levels, while spending on transport had slumped by more than 40 percent.
In Germany, a temporary reduction in value added tax has helped lift consumer confidence, according to a Growth from Knowledge study.
The Dutch national statistics board posted figures showing consumer confidence creeping up to minus 26 from minus 27 in June.
Earlier this month the Commission said the Eurozone will slump into a deeper recession than previously forecast.
The Brussels-based EU executive said the economy would contract a record 8.7 percent this year before rebounding 6.1 percent in 2021.
It compared with eurocrats’ prediction of a 7.7 percent slump and 6.3 percent growth in May.
MUST READ: Von der Leyen concedes her £1.6 trillion EU deal is substandard
The EU has since brokered a €750 billion coronavirus recovery fund in order to send aid to pandemic-stricken regions and sectors.
European leaders took an unprecedented step to allow the Commission to borrow €390 billion on the international market and hand the cash out as grants, which won’t have to be repaid.
It is unclear when the fund will begin distributing cash amid wrangling between the European Parliament, Commission and Council to fully rubber-stamp the package.